Regencell Bioscience Holdings Limited (NASDAQ:RGC) CEO Yat-Gai Au, the company's largest shareholder sees 18% reduction in holdings value

Simply Wall St · 09/15/2023 10:20

Key Insights

  • Insiders appear to have a vested interest in Regencell Bioscience Holdings' growth, as seen by their sizeable ownership
  • The largest shareholder of the company is Yat-Gai Au with a 81% stake
  • Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

If you want to know who really controls Regencell Bioscience Holdings Limited (NASDAQ:RGC), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual insiders with 81% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, insiders endured the biggest losses as the stock fell by 18%.

In the chart below, we zoom in on the different ownership groups of Regencell Bioscience Holdings.

View our latest analysis for Regencell Bioscience Holdings

NasdaqCM:RGC Ownership Breakdown September 15th 2023

What Does The Lack Of Institutional Ownership Tell Us About Regencell Bioscience Holdings?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. Alternatively, there might be something about the company that has kept institutional investors away. Regencell Bioscience Holdings' earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

NasdaqCM:RGC Earnings and Revenue Growth September 15th 2023

Hedge funds don't have many shares in Regencell Bioscience Holdings. The company's CEO Yat-Gai Au is the largest shareholder with 81% of shares outstanding. With such a huge stake, we infer that they have significant control of the future of the company. It's usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider with such skin in the game. For context, the second largest shareholder holds about 7.6% of the shares outstanding, followed by an ownership of 0.05% by the third-largest shareholder.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Regencell Bioscience Holdings

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems that insiders own more than half the Regencell Bioscience Holdings Limited stock. This gives them a lot of power. That means they own US$157m worth of shares in the US$194m company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Regencell Bioscience Holdings. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With a stake of 7.6%, private equity firms could influence the Regencell Bioscience Holdings board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Regencell Bioscience Holdings better, we need to consider many other factors. Be aware that Regencell Bioscience Holdings is showing 3 warning signs in our investment analysis , you should know about...

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.